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The right organizational structure for innovation management

To help ideas succeed on the market, you need not only a strategy, but also an organization. The central question: Should a colleague from your core team take care of this, or would you rather put these agendas in the hands of an external innovation manager? Or you can choose a combination of doing it yourself and outsourcing. However, this blog post can help you make the right decision. 

How you map innovation management organizationally depends very much on your company and your goals.

Managing innovations does not tolerate routine

If you decide on an internal innovation manager, you should also give him the opportunity to act as such. Developing new ideas for patents is an activity that is difficult to combine with others. "Part-time innovation managers" are half a solution and you will not be fully satisfied with the employee's results either. Why? Unfortunately, constantly dealing with uncertainties and risks is not compatible with routine activities whose success or failure is foreseeable.

 Safe ways are more popular

For example, if you hire a "product and innovation manager", you may not be satisfied with the output of this employee. On the one hand, they have to take care of the marketing of existing products and on the other hand, they have to develop new products to market readiness. For the one activity there are relatively secure ways, which lead to success. Not for the other one. The employee will therefore concentrate on the activity through which he can produce safer results and which others neglect.


Innovation managers need the support of the bosses

However, as a staff position, an innovation manager should report directly to top or top management. Because innovations are connected with changes, and these almost always encounter resistance. To overcome this, the innovation manager needs the support of the management. Conclusion: Your innovation manager should be able to concentrate fully on the implementation of new ideas, have the support of the boss and all other employees should have recognized the meaning of this staff position. The last point presupposes that you as Managing Director have correctly marketed and communicated the new position of Innovation Manager.

Stay on the ball with an internal innovation manager

If you have created the framework conditions described above, then internal innovation management has the following four advantages over outsourcing:

  • Your innovation manager knows his own colleagues. An external service provider must first become familiar with this and the pecking order of a company. 
  • With the internal staffing of innovation management you avoid the "not invented here syndrom". The resistance of the own staff against novelties that were not conceived within the own company walls can often be great. So big that promising ideas never reach market maturity in the end.
  • The services of an external company end with a finished concept for a new product. The application for a patent or the launch of the new product and the support in the first phase remain the responsibility of the company. If nobody there feels responsible or builds up the necessary pressure to take the last step, then good concepts also end up in the drawer. This cannot happen to an internal innovation manager. Because he accompanies the idea to market maturity.
  • Your innovation manager can fully concentrate on your industry and similar economic sectors. An external service provider, who is in many completely different industries, will never be able to compile such a depth of information. However, anyone with too much detailed knowledge runs the risk of losing sight of the big picture. An innovation manager with tunnel vision overlooks developments from other sectors of the economy that could solve his own problem or at least provide guidance.

External experts are specialists in innovation methods

You can also order new products from external service providers. You will choose this option if your own employee, who only cares about innovations, simply does not pay off. Or if you cannot or do not want to create the conditions described above in your company. But it is not only for these two reasons that you are sometimes better off with an external innovation manager than with your own employee. Because innovation management - at least partially - has the following six advantages: 

  • Let's stick to tunnel vision, which an internal employee can fall for. Industry boundaries are increasingly disappearing, and in some cases other sectors of the economy have already solved problems that you yourself are still despairing of. External service providers have a better overview because they work for many different industries.
  • External service providers usually employ more innovation managers. They exchange information with each other to find a solution. In this way you can indirectly tap into the know-how from other industries, products or projects. Your employee is usually on his own. He's having trouble finding a sparring partner. But it is precisely the discussion and discourse that holds a great deal of creativity.
  • An innovation manager who is not on your payroll is often granted the "grace of ignorance". A person who has very deep information about an area sometimes finds no solution, but a thousand reasons why something cannot work. A less informed person is less likely to accept existing barriers. He reveals the problem as not solved - but is convinced that he will find a solution in due course.
  • The time outsiders cost a company noticeably money. This can be very helpful for the progress of a project. Of course, an own employee also means a financial expenditure. From a psychological point of view, however, this is less important: Because personnel costs are incurred anyway - regardless of whether your innovation manager can achieve something or not. You will only be able to draw the consequences of a notorious lack of results after some time.
  • Outsourcing project management has the advantage that the service provider can build up a stricter structure. Employees among themselves tend to hold meetings, postpone appointments, and write minutes incompletely or not at all. You also pay an external service provider to adhere to the schedule as precisely as possible.
  • Your staff will recognize an external service provider as an expert in innovation methods faster than a colleague. However, it is important that the service provider quickly acquires a say in your industry.

Conclusion: Organizational structure innovation management

How you map innovation management organizationally depends very much on your company and your goals. If you want to increase your innovation activity, the first step is to employ an external service provider. Implementing a new staff position out of nowhere is possible, but difficult. This can have a negative effect on the motivation of their staff. Some might ask themselves: "If there is now a position for the new, am I only responsible for the "old"?"

Hiring an external service provider for an innovation project is probably easier for your employees to accept. You and your employees can also learn a great deal about innovation methods from this cooperation. This knowledge and some advice from the service provider can then help you to fill innovation management internally.

Of course, you can also map your innovation management internally and at the same time employ an external service provider. Thus you benefit from all the above mentioned advantages. In any case, it is important that you not only plan your innovation activities strategically, but also map them organizationally.

In the following article, you will learn what framework you as a decision-maker need to create in order for your organization to become holistically innovative: This is how CEOs make their company innovative.


Jannik Böckenholt

As an expert for New Business Development, Jannik is your reliable companion for new commercial ventures. When it comes to the restructuring of innovation processes or the application of innovation methods, the learned project manager guides you to your objective step by step, while making sure there is fun along the way with his inspiring storytelling in the workshops he moderates.

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